• Savvier Shoppers Threaten "Natural"

    Health advocates have been telling us for decades to scrutinize the labels on products so that we know what we are putting into our bodies. In fact the natural and organic products industry owes its very existence to the transparency that our labeling laws demand, as the funkier-sounding synthetic ingredients give way to more natural-sounding substitutes. And really, it's not like consumers don't want to make more informed buying decisions, so why is it taking so long for this label-reading thing to catch on?

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    Well, label reading is not just for hippies anymore, as recent research shows that the majority of consumers are now driven less by the package's facing and more by what is in the ingredients panel. Today's shopper is more skeptical of marketing claims made on packaging and therefore more likely than past consumers to check out the actual list of ingredients and the accompanying Nutritional Facts Panel. Many terms like fat-free are losing their luster, and it may only be a matter of time before the undefined and unregulated (but nonetheless magical) term "natural", which has so far been somewhat immune from this attitudinal change, joins that list.

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    Natural products producers have been making a fortune for decades providing foods and cosmetics that are largely free of synthetic ingredients for a label-reading, discerning, high income health-conscious public. But now that mainstream producers have been replacing and removing synthetic ingredients as part of a new long-term strategy to serve the increasingly-discerning masses, how long will these so-called "natural" producers be able enjoy their competitive advantage? What might be a boon for the food industry in general and for the well-being of consumers ultimately might not be so good for the natural products industry if everyone gets into the act. It seems that a strict, defensible, industry-enforced definition of natural would be a prudent course of action at this point so that a niche can be defended, but the natural products industry has been woefully poor at self-regulation in the past, and remains far too complacent in the face of a changing mainstream landscape.

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    In a recent Nielsen study, 61% said that the shorter the list of ingredients, the healthier they perceive the product to be. The term "clean" has been used for years among natural products producers to describe these less complex formulations, and now it looks like the idea of "less is better" has hit the mainstream. Almost 70% of consumers went beyond the box and looked online for health information in 2016 versus 48% in 2014, so the age of information is rapidly providing consumers with an unprecedented level of empowerment. And if knowledge truly is power, we can begin to say goodbye to products that contain 25 ingredients, and perhaps this is for the best. Who needs this synthetic stuff anyway?

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    But what about the "natural" segment? The problem with "natural" positioning, and the hundreds of billions of dollars being made each year from leveraging this grossly misunderstood term, is still the elephant in the living room and, like any chronic condition, an issue that regulators and the industry will soon need to address. Such a reckoning is long overdue, and a further blurring of the lines between what is and isn't natural surely will be a major threat if "Big Food" truly makes a major commitment to selling "cleaner" products, which does appear to be the case. In the meantime, more and more average consumers will read more and more average labels resulting in more and more changes in what goes into the average product. A "cleaner" future is on the horizon, and the major producers must know by now that this genie isn't going back into the bottle.

  • Still Processing

    With the meteoric 40-year rise of the natural products industry (currently generating annual revenues in the hundreds of billions while maintaining nearly 10% annual growth), processed foods have been tried and convicted in the court of public opinion for being chronically unhealthful. Artificial flavors, colors, and preservatives are now shunned by a growing gang of consumers who want more food with ingredients found in nature rather than made in a laboratory. This is a well-established trend, and although there are "faddish" elements within the industry, the health and wellness juggernaut is here to stay.

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    Processed food companies, some of whom have purchased natural companies in the past, are finally beginning to react in a meaningful way to this cultural shift after losing so much market share over the years, and some are engaging in reformulation. General Mills and Con Agra are two major players in this area and both have significant resources to be able to make significant changes in what consumers see on the shelves of traditional grocery stores. All packaged food, including the natural and organic stuff, is processed to some degree, and so the nature of the ingredients is what should be important to these organizations at this point.

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    As natural products producers well know, any effort to make products that are perceived by many consumers as unnatural become more natural begins with replacing the obvious bad guys. The effort to replace synthetic food dyes by General Mills this past year has resulted in a 3% increased in cereal sales, for example, is a laudable start, but with an increasing number of consumers scrutinizing labels and eschewing synthetic ingredients, much more effort will be required. Why is it so difficult for them to remove artificial flavors, colors, and preservatives? Sure, it's costly, but natural producers have done so, and have managed to improve product quality over the years without the benefit of billion-dollar R&D laboratories and extremely deep pockets. So, if both current and future growth lie in a "cleaner" product formulation, what's stopping these large concerns from getting with the program?

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    The answer is probably not so easy to find, but much of the problem certainly lies in the fact that it has taken decades to prove to these large companies that the industry is driven by changing consumer attitudes which, in turn, are driving changes in consumption behavior. Simply put, the makers of Chef Boyardee, Tostino's, Trix,, etc, have been fairly comfortable until very recently. Now a sense of urgency is beginning to set in, and if history is a good predictor of the future, General Mills, et al., will need to do much better than removing the proverbial "low hanging fruit" and will need to dedicate efforts towards wholesale reformulation of the packaged foods that most of us still buy. Removing artificial colors, flavors, preservatives and other laboratory-derived ingredients is a good start, and is best followed by a look at what changes can be made in how the product is processed. After that, it will be difficult to tell a natural product from a traditional product and the big companies can then work on re-branding with a confidence that only authenticity can bring. After all, General Mills should be much better than Arrowhead Mills at making a natural product conform to mainstream consumer standards regarding such important criteria as price, taste, quality, and consistency. And they have so much shelf space! The smaller natural brands have enjoyed quite a moment in the sun, but the big companies can certainly deliver value on an even greater scale. Such a move could also transform the food supply, as demand for synthetics dwindles away into nothing, which should make the core health nuts that help drive the natural industry's growth very happy. But for now it appears that "Still Processing" best describes Big Food's approach to this new world order. But how much conceded market share will be too much market share before they finally figure it out?

  • Mario's Marketing Machine

    It's hard to believe that it all began with the peculiarly-named "Donkey Kong" way back when video games were new. But the donkey and the Kong didn't have the spotlight for long as the Mario Brothers characters became the focal point for future brand extensions. Fast forward 35 years amidst many subsequent successes, and Nintendo's "Super Mario Run", its first smartphone app, tops the Apple App Store chart. Who doesn't love the Brothers?

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    With many millions of downloads, the product now eclipses another 2016 hit, Pokeman Go, but Mario's popularity might not be simply due to the immense amount of brand equity that it has built over the decades. Apple helped out quite a bit on this one. Super Mario Run got significant stage time at the iPhone event in September, with the Nintendo founder appearing with Apple CEO Tim Cook and generating a level of targeted publicity and credibility that advertising just can't match. Apple also promoted the product heavily as excclusive on the App Store, and Nintendo did some consumer marketing of its own. Thus the ascent of Mario shouldn't be too much of a surprise as was the rise of Pokeman Go (developed by Niantic and Pokeman Co.), a game whose popularity should be attributed more to word of mouth among users, rather than to internal marketing activities. Let's see what else, if anything, Pokeman has for us in the near future. But with this being Nintendo's very first smartphone app game, and with developer and retailer being so chummy, it's hard to imagine that there won't be a few more successful Mario brand extensions down the line.

  • Addicted To Deals

    First DARE told us to watch out for drugs. Then Robert Palmer warned us about the addictive qualities of love. And now these days you can be addicted to almost anything--TV, the Internet, social media, sex, shopping, eating, etc. It's all the same brain science we are talking about here, and really addiction is no joke. So it should be no surprise that after years of proliferating discounts and other sales promotions over a long series of ever expanding holiday buying seasons, we have become to a very large degree "addicted" to deals. We might as well face it, around the holidays, the vast majority of us consumers now expect a deal. Any deal. Just gimme a deal, man.

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    Last year far too much inventory, which is largely a result of over-exuberant forecasting, resulted in heavier than usual holiday discounting and ultimately scaled back expectations for 2016. The reasoning here is that making goods more scarce would allow for marketers to rely far less on sales promotions, but economic reality does not coincide precisely with the economic theories on which strategy is based. Clearly something else is at play here. What could it be?

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    Over time, we have become quite used to these promotions, and like anything that is used too much, the deals have less and less effect as we become desensitized to that stimulus. It's simple psychology at play here. Nothing fancy. A recent study reported in the Wall Street Journal exposed that online transactions involving sales promotions jumped 79% this year versus last year, proof that more consumers are opting for retailers that offer promotions. And deals up to 50% off are becoming more ubiquitous as efforts by retailers to wean shoppers off the proverbial "junk" have been unsuccessful.

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    All this discounting looks like good news for consumers on the surface of it, but the fact of the matter is that this is a fairly unsustainable state of affairs. Discounting can't escalate forever without a wholesale increase in "normal" price points. That is, goods must be further marked up initially (list price) so that they can be marked down eventually (promotion price during the holidays). Perhaps this is why the Wall Street Journal found in its own study that most goods are actually cheaper earlier in the year. Retail prices during the holidays might increase industry-wide as marketers adjust to the new pricing paradigm allowing more room for competitive sales promotions in what has become a "new normal". Will this happen? Is it already happening? Or will the discounting stop? If so, will stopping it require a retailer-imposed intervention? These are just a few good questions in this very interesting pricing situation.

  • Electric Dreams and Political Memes

    For an industry that is so small that it is barely even worth mentioning, it is interesting how much attention is given to the electric car market. Granted, most prognosticators insist that electric cars are the future, but these folks have been saying this for quite some time. Only 130,000 electric vehicles have sold in 2016 through November and the all-electric sector is still well below 1% of the auto market.

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    But with increasing regulations on vehicle emissions, electric options are becoming more attractive to automobile makers, if not to consumers themselves. Although the Chevy Volt is considered an abject failure by industry standards (having sold only 21,000 vehicles), it still took second behind Tesla's 25,000 (yes, only 25,000).  But Tesla sells luxury vehicles at present and has convinced about 400,000 people to deposit $1,000 (refundable) on an upcoming, affordable car called the Model 3. With the proliferation of environmental regulations, the planned expansion of charging stations around the country combined with Tesla's one man marketing show and the serious commitment of big auto players to the category, heavier demand for these vehicles could finally happen. Don't hold your breath, however, as all of this could and probably will change somewhat in a new political environment.

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    But if  the consumers and car companies themselves are driving the growth, then this whole conversion from the internal combustion engine to the electric motor has a much better chance of becoming a sustainable technological transition. If one particular regime is pushing it and is then resoundingly removed from power, then not so much. So what about the major players? Instead of taking its Volt and going home as a testament to having at least tried, Chevy is instead doubling down with the introduction of the all-electric Bolt. Do not confuse this with the Volt. Or perhaps you should. This is a confusing name, but GM must have its reasons. Either way, it is unclear what GM will do differently this time, lacking a charismatic spokesperson like Tesla's Elon Musk as well as the unbridled enthusiasm of his rather vocal followers. Most industry experts expect that Ford and the rest of the gang will be heavily and permanently invested in the electric car market by 2020, and so Tesla is expected to quickly lose its leadership position. Ans so after a brief foray into the low-price point populist market, Tesla might decide to be a prestige player after all, which was the initial plan. Of course, all of this remains to be seen. The point is that there has been overall optimism that this sector will finally take off. But not so fast.

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    The threats? Consumers still don't appear to want electric vehicles and their collective "greenness" is certainly up for debate considering where electricity comes from; and it is likely that many of the so-called "green subsidies" that prop up so many companies (like Tesla) will be scrutinized and many eliminated by a new regime that has a very different set of priorities. Regulation and growth are diametrically-opposed concepts, and after a very long period of what has been to many people a time of expanding regulations and substandard growth, it appears that a different strategy will be pursued. This is potentially a bad bit of news for the electric car.  If this is the case, then the industry will have no choice but to convince consumers to buy electric vehicles that might not be price competitive without all of the levels of subsidies. Good luck with that. Maybe certain states like California will continue to double down on their commitment to electric. Or perhaps hybrid vehicles, which employ both electric and combustion technologies will get another boost. There are so many possibilities. One thing is for sure, amidst the myriad marketing lessons in this situation, the one that emerges as particularly important is the potential impact of changes in the political environment and the requisite need for marketers to try to anticipate what certain wholesale changes in economic philosophy might mean to them and what sorts of legislative changes might result.. And 2017 looks to be a year of many changes indeed.

  • Checkout Transformed

    With labor costs for retailers rising far too rapidly for comfort, decision-makers are more challenged than ever before to turn towards technology and replace physical labor wherever it makes sense. Self-checkout in grocery stores, for example, has been around for quite some time, but the concept has not been adopted on a terribly wide scale largely due to the fact that it is perceived as a cumbersome, labor-intensive process for many shoppers. Besides, without the expertise of experienced bagging professionals, how would we avoid bruising our bananas, crushing our bread, or our breaking eggs? But the old method was just an iteration of the mechanization of the shopping process, another step on the ladder. Panasonic, in an effort to bring us up that ladder, will introduce an exciting new checkout machine and in doing so might be a Ghost of a much more efficient Christmas future.

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    The initial model is designed for small-format convenience stores and actually detects the merchandise in the shopping basket (using electronic tags), calculating the bill without the time consuming pick-and-scan method to which we have all become so accustomed. After a customer places the basket in a slot, the bottom slides out and the goods are placed into a plastic bag underneath. Groundbreaking stuff, unless you live in San Francisco, which has banned plastic grocery bags a few years ago. I'm sure they will figure something out, since nothing (short of outright bans) will stop the adoption of this sort of labor-saving, customer experience-enhancing technology, if indeed it does turn out to enhance the customer's experience.

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    Although "scarcity of labor" is often cited publicly as reasons for why retailers are looking to rapidly replace labor, it's really mostly about the rising costs. In a rapidly growing number of places, $15 an hour is the law, and far too many retailers are either unwilling or unable to pay those kinds of wages for essentially unskilled clerks. And as we have learned through astute observation of the marketing environs over time, necessity is all too often the mother of invention. Panasonic, for its part, has offered up one mother of an invention, and it will be the first of many offerings from multiple brands. Unsurprisingly, Amazon has one of its own, a concept called Amazon Go that eliminates checkout and cash registers altogether. Obviously much research and development must still be done in order to scale the concept up to fit multiple retail formats, but it's one heck of a start. While this might be horrible news for labor unions and career sales clerks, it is certainly good news for consumers.

  • Fake News, Real Advertisers

    As if the very existence of "fake news" isn't bad enough, it appears that some of the purveyors of this questionable content have been profiting rather nicely from paid advertising. And the advertisers aren't the sketchy "back pages" type players that one might expect to find, but rather big brands with reputations to uphold.

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    Granted most of these ad placements are unintentional, seeing that the recent automation of much of the ad buying function in general as well as the voluminous amount of ad space available on the internet have made filtering more difficult for ad buyers. To compound the problem, ads are changed out very frequently on most sites, and the ad buying process generally involves several intermediaries. Social media sharing of bogus news stories has only made it worse.

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    The algorithm that makes the decision on where to place a particular ad doesn't know the difference between real news and fake news, and so some human intervention will be necessary in the immediate future. The uproar over misinformation on the internet is not likely to subside any time soon and some have even called for prosecution, so there will have to be more accountability from the industry. Ram might not want its truck ad next to a fake story about Yoko Ono's affair with Hilary Clinton in the 70's, but the algorithm sure liked the placement; and until increased efforts are made to combat this problem, the brand's credibility as well as the credibility of the content we consume will remain a hot button issue. 

  • Trademark Denied (For Now)

    The Las Vegas Golden Knights. It's time for hockey fans everywhere to get used to a new team, and for residents and visitors to embrace what will be only the first of several top-tier professional spectator sport properties in the city. The NHL's newest franchise will play in the posh T-Mobile Arena when the first players hit the ice next season, but the team experienced a setback when the U.S. Patent and Trademark Office denied the team a trademark two weeks after marketers unveiled the name and logo. The reason? The College of Saint Rose in New York already uses the Golden Knights moniker and registered a trademark in 2004.

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    The team will argue that there would be no confusion in the marketplace, and even the most casual observer would note that there are lots of sports teams that have the same names (i.e., Wildcats). But since the college was in fact issued a trademark and has actively used it in communications, it might raise issue if in fact the Office decides to let the two marks be registered in "co-existence" with one another. Or the college might not care to fight it. It is unclear what will happen here, but it is certain that Golden Knight marketers should have performed a simple internet trademark search and consulted with lawyers familiar with intellectual property law prior to moving forward with establishing the brand identity. It is hard to believe that they didn't do their due diligence, and if they did, the whole affair might indeed be what the team has described as "a routine matter".

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    Golden Knights spokespeople have said that reconsidering the name or logo of the franchise is not something that they are considering at present, and Saint Rose hasn't said anything about how it will proceed. For now, it looks like lots of billable hours for legal teams as well as an expenditure of taxpayer resources are good possibilities, at least in the short run, depending on what the college decides to do. In any case, it is highly likely that NHL fans will see Golden Knights-branded apparel when the action begins in Fall of 2017. After all, these owners have some pretty deep pockets.

  • Talking Toys Also Listen

    The talking toy category emerged about half century ago with the introduction of a handful of very basic products that often involved pulling a string, as parents sought new ways of encouraging their kids to entertain themselves in an emerging age of working moms and rapidly developing technology. These toys may seem quaint now, but think of how many products are on the market today that in one way or another communicate with children. Many are even connected to the Internet, which is kind of a scary thought for many parents.

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    So not only do many toys on the market talk, a few of them are now beginning to listen as well, and this isn't sitting well with some consumer advocacy groups. Not surprisingly, many toys are able to gather user data, just like so many of the other products we use every day, and since "behavioral targeting" has become such an important component of marketing, companies within the industry, government regulators, and non-profit watchdogs are still trying to figure out how to protect consumers while maintaining a free market orientation. But when it comes to children, a more conservative approach to collecting data for marketing research is often preferred.

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    A complaint recently filed with the Federal Trade Commission by several groups, including the Campaign for a Commercial Free Childhood (itself a coalition of groups) and Consumers Union, said that internet-connected toys in general pose privacy risks to children (who cannot think critically and make informed decisions as adults are supposed to be able to do) and that the parents are often unaware that data is being collected as well. Genesis Toys, makers of the I-Que Intelligent Robot (boys) and My Friend Cayla (girls), is the subject of this complaint. The toys are connected via Bluetooth and a smartphone app and come up with responses to user questions. User voice data is sent to a speech recognition company which then may use the data for other products. I'm not sure exactly how this sort of data can be used, but not much surprises me these days.

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    Indeed, if Genesis Toys is failing to obtain the consent of parents before marketers collect and use data such as voice recordings, the Hong Kong-based company is likely in violation of the Children's Online Privacy Protection Act. It is a Chinese company and may not be familiar with this relatively recent act of Congress, or it may be aware but not really care. The Cayla doll also talks about how much she loves the Disney movie Little Mermaid, which sounds a lot like brand integration but is probably just coincidence since Disney has no agreement with the company and has said that it is unaware of the promotional activities. This complaint will likely be taken to court by the FTC unless Genesis decides to admit wrongdoing. Marketing to children is highly controversial, and the FTC is likely to take this particular complaint seriously enough to take action.

  • Wearable Tech...Blah...Blah..Blah

    It doesn't take much to make this professional cynic roll his eyes, especially when it comes to new product introductions that clearly have underwhelming long-term revenue potential. All of the marketing dollars in the world won't sustain a product which a consumer does not need. The "marketing concept" teaches us that consumers must be the focus of new product development, and that a marketer must first assess a need in the marketplace and then create an appropriate marketing mix to meet that need. In this way a marketer can maximize the chances of success. A "product focus", on the other hand, on rare occasions gets lucky but almost always results in failure. Lecturing in front of 120 students each semester and writing the KnowNow! Marketing blog affords much opportunity to prognosticate, and I have done just that. Some of the "doomed-to-under-perform" products discussed in my classes and mentioned in this column over the past five and a half years are Google Glasses, 3-D television, 3-D movies, tablets, and wearable technology among several others. Products that may sound cool, but for which there is really no established market opportunity, tend to roll through the Product Life Cycle far too quickly. Tablets, for example, while initially driven by the hype surrounding the iPad, peaked within a couple of years and new devices are now fusing together with the laptop category. The early models did not in fact replace the laptop or the smartphone and ultimately represented just another category of gadget that people didn't really need, and the new category is fast becoming a laptop-tablet hybrid. Tablets that do not function like laptops will probably largely disappear, as will laptops that are too cumbersome. And the same goes for the glasses, 3-D products, and the Segway for that matter. So what about the watches?

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    Wearable technology is very rapidly going the way of the tablet. Lots of hype with big brands making big bets and spending big marketing dollars resulted in attracting Innovators and Early Adopters, but a struggle to reach enough of the Early majority is resulting in an early maturation. In short, an adolescent product category is achieving adulthood too soon, like going from 18 and spry to 35 and middle-aged in just two years. How is this so? Shipments are already down from their peak in late 2015 for a product introduced only three years ago.  Perhaps for most folks, checking the old heart rate 100 times a day and counting the number of steps taken (or distance traveled) is cool, but gets old after a while. Fitbit recorded its slowest growth in the brand's very short life, and Apple also seems to be struggling, but we don't know for sure because the company doesn't disclose its watch sales for some suspicious reason. And all of this flattening is amidst new product introductions by both brands.

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    The situation certainly shouldn't sound very promising to any marketers interested in exploiting opportunities in the marketplace, and while many of these rapid-maturation products do stick around for a long time, they under-perform and the technology they are based on usually becomes a part of other products such as when the GPS device gave way to smart phones enabled with the technology. Wearable technology, providing all kinds of interesting feedback for the user, won't go away, but as for the watch? Most of us tell time using our smartphones and these devices, which we all have, can do almost everything a watch can do. Other forms of wearable technology might be more effective at monitoring personal health. So who needs a watch? The answers lie in what unfolds during the next couple of years. Let's see what happens.

  • Starbucks Looks For Big Bucks

    After convincing the world over the past three decades to dump the Folgers and the Sanka and instead habitually spend four bucks or more for a souped-up cup of coffee, and having become even more ubiquitous than McDonald's in that period of time, Starbucks is at an impasse. Its current store concept has saturated the most lucrative markets, and so it's tough to get much growth from opening new stores at this point. And adding lots of food options and even alcohol (at some locations) over the past few years has brought more people into some existing stores, but even this effort will result in only moderate growth at best. So what can marketers do to jump start growth for what has become a truly remarkable brand?

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    Soon-to-be ex-CEO Howard Schultz, who has developed quite a reputation as a devil-may-care risk taker, is stepping down to lead an effort to develop a store concept that promises to offer an even more expensive cup of Joe. The current model employs a "premium" pricing strategy, as consumers pay more for a higher quality product. But this new, higher-end concept will feature coffee beverages priced as high a $12, which looks more like "prestige" pricing wherein the consumer pays for more than just better-than-average quality, adding brand equity to the value proposition. Sometimes it's difficult to discern between the two strategies, but from Rolex watches to Tesla cars to Nike polo shirts, high income consumers (and even some not-so-high income consumers) buy this sort of stuff all of the time.

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    But will enough consumers pay even more for coffee beverages as they have in the past for high-end spirits, wines, and other product categories? And won't this new concept steal customers from current Starbucks locations, a concept known as "cannibalization"? Indeed increasing competition from specialty roasters such as Intelligentsia and Stumptown has raised the stakes with recent expansions that have cut into Starbucks's market share, and even Dunkin' Donuts is experimenting with higher price point beverages. With growth flagging, marketers should try something new, and Mr. Schultz has vowed to give this effort his full attention, stepping down from leading the organization he directed for so many years. Perhaps over time, the traditional Starbucks format can begin to lower its price points, thus expanding its market potential, and obtain growth in that way. The new, prestige concept (which is yet unnamed) could, during this same period of time (say 10 years), systematically drop its price point to expand its market potential, a pricing strategy known as "skimming". This way, both Starbucks concepts could eventually address the entire market for coffee at multiple price points. It's just an idea, but it does sound like a smart long-term strategy. 

  • Amazon Testing Store Formats

    The announcement made many months ago that Amazon was considering brick-and-mortar stores raised many eyebrows in the retail sector. Isn't the lack of physical locations precisely Amazon's competitive advantage? What would the company sell? Why would this be a good idea?

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    Because CEO Jeff Bezos says so, that's why! And, it's true that the marketers at Amazon have been smarter than most of us observers. Now that market testing is becoming a reality, Amazon has at least three store formats in mind, and all of them involve groceries. Although the online grocery concept failed spectacularly in the late 1990's (The Great Webvan.com Debacle), it appears that most consumers are now ready, willing and able to integrate grocery shopping and e-commerce, and Amazon is ready to provide store locations to facilitate the process.

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    Marketers unveiled "Amazon Go", a small-format, convenience style grocery store, on Tuesday, and the company is also considering at least two larger format concepts that feature in-store shopping options to see which ones resonate best with consumers. Online ordering would obviously be a component of all of the proposed formats, but smaller locations may not offer much, if anything, in the way of in-store shopping. Larger locations, on the other hand, might not require an online ordering component. And now that Amazon operates it's own fleet of vehicles for package distribution (bypassing USPS, UPS, FedEx, etc.), the company is better able to control the logistics part of this major strategic play.

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    Amazon helped to define e-commerce, and it is currently learning lots about distribution, but merchandising in brick-and-mortar stores is a different matter altogether. The company has been operating bookstores for a while now, but perhaps an established grocery partner might be in Amazon's not-too-distant future. Selling groceries, versus other types of goods, has its own particular set of challenges. One thing is for certain, however; the company is large enough and competent enough to get the job done with or without a partner. Over the years, Amazon has absolutely redefined retailing, and so there is no reason to believe that the company won't continue to do just that.

  • Smart Habits, Smarter Shoppers

    A few years ago, the Wall Street Journal conducted a multi-year study that tracked the prices of certain categories of goods. The point was to prove that the vast majority of goods and services are actually cheaper at other times of year when compared with the discount-intensive "holiday season". The study did just that. But aside from the wisdom of doing your holiday shopping in advance of the holidays, here are some additional "best practices" for savvy holiday shoppers.

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    1. Studies show that the most successful people in business maintain to-do lists, and shopping strategy should be no different. Prepare and use a checklist.

    2.  For most retailers, online and in-store pricing have been harmonized, so it might not be necessary to go to the store at all. But if you do go, use your smartphone to compare competitor prices. Many retailers will match competitor pricing. A variety of apps can be useful here.

    3.  Pay close attention to emailed sales promotions, especially from retailers you frequent. Amidst all of the clutter, there are some truly excellent deals.

    4.  If you want attention from sales associates, visit stores in the early hours before employees burn out. If you want to be ignored, go to the store toward the end of business hours.

    5.  Set a budget and stick to it. An extra allocation in the budget to allow for impulse purchases might also be a good idea. We are only human after all, and even the smartest shopper can fall victim to an unplanned impulse purchase. Evaluate the process.

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    Now that Black Friday has pretty much become a week-long event and online revenue now outpaces in-store revenue, some of the pressure surrounding holiday shopping has been alleviated. E-commerce has made things vastly easier for the average consumer; this fact becomes especially obvious around this time of year. And just like successful marketers, shoppers who plan, implement, control and evaluate simply make better decisions.

  • Millennials Prefer Marlboro

    Nicotine is not yet dead, yet the number of smokers/vapers/chewers of tobacco products continues to drop year after year. In fact, only 15% of young adults use these kinds of products, and, to the vast majority of society, this is certainly a very good thing. And so the industry is steeped in decline, which means that marketers must compete for an ever-dwindling consumer base amidst an ever-increasing sea of regulations. It doesn't sound like much fun to me.

    But marketing doesn't have to be fun, and Marlboro has managed to find its way through the smoke by positioning a product to attract young adults. Ethics and social responsibility notwithstanding, these are legal products that are sold and marketed to adults, and Marlboro has ceded quite a bit of market share to Camel, Newport and others over the last several years. This is why, five years ago, marketers introduced Marlboro Black, a less expensive, bolder-tasting brand extension.

    Even without Black, Marlboro is still the market leader with market share that is greater than both Camel and Newport combined, but as existing products languish, the new product has really resonated among a group of young people characterized primarily by tattoos, black jeans, and motorcycles (over cowboy hats, blue jeans, and horses--the traditional brand personality).  Interestingly, direct mail is a major promotional technique employed marketers (featuring a black post card that looks like a VIP invitation as well as dollar-off coupons) rather than a robust internet platform. And it so far it is working out rather well.

    Nothing will stop the decline of this industry, but it is nevertheless important that Marlboro marketers "harvest" as much as possible from the brand before it is time to exit the dying industry. In the not-so-distant future, it is quite possible that the Red brand might be phased out, as young adults age and stick with the brand they prefer. Remember that these products are highly addictive, and so brand loyalty is more pronounced here than in most other  product categories. That's why it is important to engage customers when they are young and forming brand preferences. Tobacco may be nasty stuff, but it is still big business, and marketers must continue to attract and retain customers.